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Executive Summary
There are many different opinions about exactly what should go into an Executive Summary.
The Executive Summary is preferably about 2 pages long. It is usually meant to be a
motivational piece - transfer the "sizzle" of your business plan into a few concise paragraphs. It
should review the current status of the company, and where it may be headed. You can use
narrative or bullet points (usually best if it is a combination of both). Remember that this may be
the only section of your business plan that a potential investor may read.
1) Cover Page
On the cover page, simply put the name of the business and the desired funding
level/investment
2) Description of business
a) Business Name - Indicate the company name and vital contact information
b) Primary Product or Service - Here you should ADD SIZZLE. Make your business
sound exciting, as an opportunity! Back in the first section of this plan, you were asked
to identify what it is that you really sell - this might be a good time to use that
description. You may not have a unique product or service, but you can sure make "we
sell widgets" to sound more exciting.
c) Customer segments & how you'll meet their needs - Here you want to define the total
market size for your products or services. This is where that number which represents the
total market size comes in handy - you can define your market potential. You might also
wish to state your projections for growth. It is also important here to indicate briefly how
you will fill their unmet needs. Identify how your business is unique from your
competitors. In the Product/Service Plan you identified the unique aspects of your
product or service - this might be a good time to use that description.
a) Mission statement - Please limit the length of your mission statement here to a sentence
or two, with, perhaps, a few bullet points.
b) Key objectives quantitatively stated - (sales, market share, growth rate) You may wish
to indicate annual objectives for sales, market share and growth rate, or you may wish to
state your objectives for only one or two of the items.
a) Investment/ loans required and what used for (matching) - When stating how much
money we need, we need to also state how much the owners have infused into the
company as well. A chart here, perhaps using a stacked bar chart, may clearly
communicate where investments and monies will go, and how much owners have
contributed. Government loan programs may not want to see their moneys going into
working capital, but putting those funds to work in securing machinery might appear to
be a more prudent use of the funds.
b) Sales projections (figure for the first year) - Here it is important to note that lenders
and investors might compare your projections to industry standards, such as those
obtained from publications such as Robert Morris Associates (R.M.A.) Annual Statement
Studies. Your local SBDC will have this publication in their resource library. This
publication is organized by business type based on a four-digit SIC code, and presents
profit/loss, balance sheet, and ratio information. Those data are presented relative to the
size of the firm in sales volume, and also relative to the year of operation. These data
provide a general yardstick for comparison - if our projections indicate a certain sales
volume and certain level of profitability that are contrary to the industry norm, it might
become apparent that our numbers are overly optimistic.
c) Profit and loss projections (figure for the first year) - Indicate your annual projection,
but, as above, compare your figures against the industry standard to establish
reasonableness.
2) Company objectives
a) Purpose of the plan
b) Mission statement
c) Advertising slogan
d) Goals
e) Objectives
Goal:
Who responsible Activity Time Frame Measurement Sign-off
Objective 1:
Objective 2:
3) Industry Trends
c) Legal Form
Account Itemizations - Financial Plan
The purpose of this section is to work out the details of how you will categorize and itemize your
financial expenses, and to get you to begin the process of obtaining quotes/bids. These exercises
are meant to stimulate thought regarding the extent that expense itemizations exist for your
business opportunity.
At this point in time we are not attaching dollar amounts to each of the itemizations - we are
instead looking for the full range of expense itemizations. This will give us a strong feeling
regarding the potential cost structure of our business opportunity. Please bear in mind that
marketing expenses are not included in this section.
1) Business Insurance
There are many types of insurance coverage available to assist your business to mitigate risks.
Insurance needs will vary with the types of business you are in because different types of
businesses have different types of risks associated with them. The following are the most
common types of insurance.
b) Crime – This covers loss due to burglary, theft, computer theft, fraud, or other crimes.
c) General Liability - You really must have this type of coverage if you are in business
because it covers your customers for potential injury in case of accident. The most
common type of coverage includes protection for: customer bodily injury or property
damage, claims from use of premises, medical payments, off-premises liability, and
contractual liabilities.
d) Inland Marine – The covers the movement of goods from one location to another.
e) Machinery – Protects with expenses associated with direct damage caused by sudden or
accidental breakdown of a wide variety of electrical or mechanical equipment.
f) Medical Malpractice – This covers medical and dental professionals of all kinds.
i) Property - This type usually includes coverage for signage, newly-acquired buildings,
outdoor property, and off-premises property. Additional coverage for spoilage or sewer
backup will allow you to protect against industry-specific risks.
j) Umbrella Policy - These types of coverage usually provides for protection for unusual
risks, catastrophes, and additional coverage above and beyond underlying insurance
coverage.
2) Contracted Services
What types of independent contractors might you need to utilize? Independent contractors
are not employees - typically they are companies that we use to conduct specialized services.
a) Accounting - What types of accounting services might you need to use? The most
common types are bookkeeping services, CPA services, payroll services, or tax services.
b) Consulting - The most commonly used type of consulting services include management
consulting and organizational consulting services.
c) Legal - Will you need to contract with attorneys? For what purpose? Legal firms can be
retained for a set annual fee - allowing up to a certain number of hours service, with a set
hourly rate for each additional hour. This may allow your firm to tap into various legal
experts depending upon which need arises.
d) Maintenance - These types of contracts will vary depending upon the types of industrial
machinery, office equipment or facilities. These might include anticipated repair
services, copier maintenance, machinery maintenance, vehicle maintenance, security
system engineering, or janitorial services. Trash or garbage services are not to be
included here, as they are considered to be an occupancy expense.
f) Personnel - Companies may contract for personnel services. One popular option is to
lease back your "own" employees from an employee leasing firm. This process might
allow the firm to drastically lower its burdened employee cost rate - workers
compensation and other mandatory and optional benefits may be purchased at a volume
discount through the leasing firm. Other types of personnel services might include
temporary agencies, secretarial services, or rent-an-executive programs.
3) Debt
What type of debt do you anticipate obtaining? Please remember that debt, by
definition, requires that there be a principle amount, an interest rate, and a payback
period. If you get a “loan” from mom or dad to “pay back when you can” – that is not a
loan (it’s a form of venture capital).
4. Family loan
4) Employees
a) Job or Occupational Title - For the purposes of this plan, let us project out for
the first year only. For each type of employee, what is the job or occupational title? Job
or occupational titles can directly relate to the ego of the employee and the image that the
job projects. As an example, is the person a "janitor" or a "maintenance engineer"?
Brief description:
Brief description:
Brief description:
Brief description:
b) Number of Full-time or Part-time Help Required - You will need to specify how
many employees will be needed in the first year, and if they will be full-time (F/T) or
part-time (P/T) employees.
c) Brief Description - Specify briefly (one or two sentences) what this person will do. At
this point you do not need to draft out clearly defined job duties, or the skills required for
the job - that will come later when you complete your Personnel Plan. Right now, you
want to get an understanding of how many employees you will need to hire, and what
type of personnel your business will need during the first year.
Types of Employees Required - Examples - To assist you, in thinking about the types of
employees your business may require, a list of examples is included for your review:
Accountant Manager
Bartender Mechanic
Calligrapher Outside sales agent/ sales
representatives
Cashier Owner/manager/operator
Cell boy Paralegal
Clerk - Inventory Pathologist
Clerk - Office Phlebotomist
Clerk - Shipping Pool cleaner
Cook Purchasing
Cutter Receptionist
Delivery drivers Salespeople
Designer Screen printer
Dispatcher Secretary
Electronic technician/ engineer Security guard
Engineer Sign painter
Florist designer Swimming instructor
Gardener Teachers
Graphic artist Tinter
Housekeeper Travel agent
Janitor Waiter
a) Mandatory Employee Benefits - What are the mandatory types of benefits you will be
required to provide for all employees? These include: social security tax, Federal tax,
State tax, and Worker's Compensation insurance. You will need to determine what the
"burdened" costs are for each employee in your organization - more on that later, when
we will provide specific instructions. Part-time employees do require mandatory
benefits. These “burdened costs” may conservatively be estimated as 11.5 % of
employee salaries.
b) Optional Employee Benefits - What are the optional types of benefits that you might
want to provide to the different types of employees you will have, including yourself?
The type of benefits provided may depend upon full-time or part-time employee status,
and the philosophy of the owner. The most common types of optional benefits are listed
below:
Full-time employees (other than owners) typically varied in the types of benefits they
received from A to A, B, C, D and G. Results were almost unanimous that owners
wished to receive A through G (all benefits). You will need to begin to get quotations for
the types of benefits you want to provide.
Fixed assets usually refer to long-term assets, or property that will have a useful life of over one
year, or have a value of over $5,000. If you plan to expense an item under Section 179 of the
Internal Revenue Service Code, you should first check with your accountant to determine how
your assets should be classified. These expenses include common leasehold improvements,
which are the expenses related to the construction of new counters, carpeting, tile work, and
other improvements of the “bare walls” at your business location. Fixed assets may include
items such as the following:
Your business will require many small items, or items that will need to be expensed. Often times
we don’t realize how much we will really need to start the business, nor how often we will need
to replenish our supplies. A starter list has been created for you to begin to itemize what some of
your miscellaneous supplies may be:
29. Floppy disks 30. Printer ribbons/ cartridges 30. Zip strip
30. Fuses
8) Occupancy Expenses
There are many costs associated with operating your business at any particular location. Some of
these costs may be evenly spread over a period of twelve months, but many will vary greatly
from month to month. It is important to project these expenses out on a month-by-month basis –
this will enable a more accurate picture of cash-flow implications for your firm.
Rental Expenses – Any mortgage payments should be broken down by principle and interest
itemizations, but they should be itemized under “Debt” (Section 3 above).
Electricity (be sure to include deposits and installation fees) Also be sure to include the
costs of changing or adding varying voltage systems (e.g., add 220v lines and outlets).
Water (be sure to include deposits and installation fees) You can usually obtain an idea on
these expenses from a local Building Department or Small Business Bureau.
Telephone – How many telephone lines will you need? For telephone, facsimile, and internet
access? Do you need a “key” telephone system? What are the installation and set up fees?
Monthly charges? Project out variable use of these resources based on cyclic demand trends.
The cost for the telephone system itself should be itemized under fixed assets.
Trash (be sure to include deposits and installation fees) Some cities use trash permits as the
method of choice for “business licensing.”
9) Start up expenses
What are the one-time start-up expenses? What will it take to open your doors for business for the
first time? When determining these amounts, one month’s expenses will most likely be
sufficient to cover all of the costs because these expenses will almost always occur prior to the
actual opening. Existing businesses will not have these expenses and this section should be
skipped.
Licenses required by regulatory bodies or need to conform to industry standards (these may
become annual expenditures)
Pre-opening expenses – This may include expenses for marketing research, or the legal
assistance fees or accounting fees while organizing your business, incorporation fees, or
filing fees. Your tax bill will be impacted by the way you treat these start-up expenses. You
can not deduct these types of expenses if they incur before the business actually starts.
However, if you incurred them before your business actually started, you make a special
election to write them off over a period of five years (60 months) or more. It is vital that you
keep accurate records of what these expenses were, prior to start-up, and that you choose the
60-month write-off election as soon as your business gets started. If you do not choose the
60-month election, you must capitalize these expenses, which means you cannot recoup them
until if, and when, you sell the business.
a) Description
i) Orientation
(2) branding
v) Coordinated portfolio?
i) Overall relationship –
Low Quality–Low Price Medium Quality – Low Price High Quality – Low Price
Low Quality – Medium Price Medium Quality – Medium Price High Quality – Medium Price
Low Quality –High Price Medium Quality – High Price High Quality – High Price
i) Competitors
- - - -
Quarter I Quarter II Quarter III Quarter IV
- - - -
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
+ + + + + + + + + + + +
Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg
- - - - - - - - - - - -
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
a) Competitors
b) Competitor Comparison
i) TOP 5 Priorities
b) Positioning Description
2) Legal Protection
a) Legal Protection
a) Technical Obsolescence
b) Style obsolescence
At this time, you will need to gather information and obtain quotations and bids for each of the
sections covered in the “Financial Plan – Account Itemizations”:
Business Insurance
Contracted Services
Debt
Fixed Assets
Occupancy Expenses
Start up expenses
2) Sheets to be completed
Employees
The employee sheets will not be able to be properly completed until after you have completed
the “Personnel Plan”. At that time you will have detailed your staffing level requirements.
3) Completion of analyses
Seasonal Sales Cycle – from “The Product or Service” – The seasonal cycles will help to
determine some of the variable elements of your cash flow.
Annual Sales Forecast – from “The Marketing Plan” The marketing plan has not yet
been completed, but, it is important to know that a good “guesstimate” will be necessary
before financial statements can be completed.
You will need to complete each of the preparatory sheets prior to the final financial statements.
These sheets will require that you obtain information and bids. Each preparatory sheet will need
to be completed across all months for each applicable itemization. Please enter the annual total
in the last column to the right. You will notice that you will also need to tabulate totals at the
bottom of each column – this may indicate variations that may have severe cash flow
implications.
Spreadsheets to be completed now:
Business Insurance
Contracted Services
Debt
Employees
Fixed Assets
Occupancy Expenses
Start up expenses
a) Customer Characteristics -
The segmentation variables I will look at are:
(3) Worst Case Scenario (Cut your “most probable scenario” in half): $
To begin the process of developing strategy, it is usually easiest to draft out “key words”
that describe your strategies
b) Strategies Based on Positioning
To begin the process of developing strategy, it is usually easiest to draft out “key
words” that describe your strategies
To begin the process of developing strategy, it is usually easiest to draft out “key words”
that describe your strategies
To begin the process of developing strategy, it is usually easiest to draft out “key words”
that describe your strategies
To begin the process of developing strategy, it is usually easiest to draft out “key words”
that describe your strategies
a) Strategy Statements
v) Segmentation Strategy:
b) Customer Appeal
i) Appeal
(1) Product
(2) Price
(3) Promotion
(4) Distribution
3. Sales System
a) Selling skills
b) Type of sales
c) Selling Methods
i) How.
ii) Frequency
d) Sales Compensation
4. Distribution Channels
b) Budget
Specify for each of the above-selected activities (in the following table)
c) Timing
List the timing issues for placing the chosen marketing tools (in the following table).
d) Advertising Message - state “recognition” or “buy now” - (in the following table)
6. Pricing Strategies
a) Pricing Strategies
b) Open Account
c) Discounts
i) Volume Discounts
ii) Use-quantity
i) Business experience
a) Outside investors
b) Outside Directors
d) Recruitment Plan
i) Employees Needed
Employee title
Employee title
Orientation Method
a) If manufacturing firm -
b) If service firm -
i) Scheduling of employees work hours (weekly coverage view)
Appointment systems
Prepare reports (e.g., financial statements, sales reports, quarterly taxes, sales report,
etc.)
b) Cost of location
c) Equipment needed
d) Leasehold improvements -
i) Improvements?
ii) Costs?
3) Quality Control Methods
a) Techniques
i) Qualitative Measures
a) Reorder Point
i) Protection
a) Purchasing Priorities
b) Sources of Suppliers
We will consolidate the previously completed worksheets in this financial plan. In order to
complete this section of the plan, you must have already completed all of the worksheets in the
"Financial Plan - Amounts" which include the following:
Business Insurance
Contracted Services
Debt
Employees
Fixed Assets
Occupancy Expenses
Start-up Expenses
Completion of the above mentioned financial sheets will allow consolidation and the
development of your key financial statements. The financial statements that follow include the
following:
1) Operating Expenses
3) Balance Sheet